S.F. Apartment Ass'n v. City & Cnty. of S.F.

• Decision Date: 05 November 2015
• Docket Number: Case No. 15–cv–01545–PJH
• Citation: 142 F.Supp.3d 910
• Court: U.S. District Court — Northern District of California
• Parties: San Francisco Apartment Association, et al., Plaintiffs, v. City and County of San Francisco, Defendant.

142 F.Supp.3d 910

San Francisco Apartment Association, et al., Plaintiffs,

v.City and County of San Francisco, Defendant.

Case No. 15–cv–01545–PJH

United States District Court, N.D. California.

Signed November 5, 2015

James Richard Parrinello, Christopher Elliott Skinnell, James Warren Carson, Nielsen Merksamer Parrinello Gross & Leoni LLP, San Rafael, CA, for Plaintiffs.

Jeremy Michael Goldman, San Francisco City Attorney's Office, San Francisco, CA, for Defendant.

ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS

PHYLLIS J. HAMILTON, United States District Judge

Defendant's motion for judgment on the pleadings came on for hearing before this court on September 30, 2015. Plaintiffs appeared by their counsel James R. Parrinello and Christopher E. Skinnell, and defendant appeared by its counsel Assistant San Francisco City Attorney Jeremy M. Goldman. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, the court hereby GRANTS the motion as follows.

BACKGROUND

On October 21, 2014, the San Francisco Board of Supervisors enacted Ordinance No. 225-14 ("the Ordinance"), which became operative on March 7, 2015, and imposes requirements on the process of negotiating tenant buyouts.

The Ordinance amended the San Francisco Administrative Code to add § 37.9E,

1) to require landlords to provide tenants with a disclosure of the tenants' rights before the landlord commences buyout negotiations; 2) to require landlords to file a form with the [San Francisco] Rent Board indicating the address of the unit that may become the subject of buyout negotiations; 3) to require all buyout agreements to be in writing and to include certain statements about the tenant's rights; 4) to allow tenants to rescind buyout agreements for up to 45 days after the agreements are fully executed; 5) to require landlords to file a copy of buyout agreements with the Rent Board and to pay a fee to the Rent Board; 6) to require the Rent Board to create a publically available, searchable database of buyout agreements; 7) to require the Rent Board to provide an annual report to the Board of Supervisors regarding tenant buyouts; 8) to authorize tenants to bring civil actions for actual damages and civil penalties against landlords who fail to provide the required disclosures about the tenants' rights; and 9) to authorize certain non-profits to bring civil actions for a landlord's failure to file a buyout agreement with the Rent Board.

Ord. No. 225-14. The Ordinance also amended § 1396 of the San Francisco Subdivision Code to "prohibit buildings from entering the condominium conversion lottery if the owners of the building have entered certain tenant buyout agreements." Id.

The stated purpose of the Ordinance is to "increase the fairness of buyout negotiations and agreements by requiring landlords[ ¹ ] to provide tenants with a statement of their rights and allowing tenants to rescind a buyout agreement for 45 days after signing the agreement, thus reducing the likelihood of landlords pressuring tenants into signing buyout agreements without allowing the tenants sufficient time to consult with a tenants' rights specialist." S.F. Admin. Code § 37.9E(a). Another stated goal of the Ordinance is to "help the City collect data about ... the number, location, and terms of the buyout agreements[,]" in order to understand the level of tenant displacement in San Francisco. See id.

Plaintiffs in this action are four organizations of residential landlords, property managers, and/or realtors—the San Francisco Apartment Association ("SFAA"), the Coalition for Better Housing ("CBH"), the Small Property Owners of San Francisco Institute ("SPOSFI"), and the San Francisco Association of Realtors ("SFAR")—and one individual landlord, Norman T. Larson ("Larson"). Defendant is the City and County of San Francisco ("CCSF").

Plaintiffs initiated this action by filing a "petition for writ of mandate" and a "complaint for injunctive and declaratory relief" in the Superior Court of California, County of San Francisco, on March 5, 2015. Plaintiffs seek an order declaring the Ordinance to be illegal and unenforceable in whole or in part. CCSF removed the case on April 3, 2015, alleging federal question jurisdiction based on allegations of federal constitutional violations. Plaintiffs assert three causes of action—(1) writ of mandate, based on alleged violation of rights under the U.S. and California Constitutions;² (2) injunctive relief; and (3) declaratory relief.

In the first cause of action, plaintiffs allege that the Ordinance violates free speech rights under the U.S. and California Constitutions; violates "the right to enter into voluntary settlement of disputes" (no constitutional provision specified); violates equal protection and due process rights under the U.S. and California Constitutions; and violates the right to privacy under the California Constitution. Plaintiffs challenge the following provisions of the Ordinance:

The Disclosure Provision —Prior to commencing buyout negotiations,³ the landlord must give the tenant a form developed by the San Francisco Rent Board containing a disclosure of tenants' rights and an explanation of how to obtain advice and information regarding buyout agreements. S.F. Admin. Code § 37.9E(d)(1)-(6). The form must also disclose the condominium conversion restrictions that apply to certain buyouts and, if the landlord is an entity, the identity of persons within that entity who have negotiating and decision-making authority. Id. § 37.9E(d)(7)-(8). In addition, the form must contain a space for the tenant to sign and write the date he/she was provided with the disclosure. Id. § 37.9E(d)(10). Plaintiffs allege that the Disclosure Provision violates landlords' right to free speech, and to due process and/or equal protection. See Cplt ¶¶ 14, 16.

The Notification Provision —Prior to commencing buyout negotiations, landlords must provide the Rent Board with a statement signed under penalty of perjury that the landlord provided each tenant with the disclosures described in § 37.9E(d) and set forth above. S.F. Admin. Code § 37.9E(e)(4). The notification must also include the landlord's name and business contact information, the tenant's name, and the address of the unit that may be the subject of buyout negotiations. Id. § 37.9E(e)(1)-(3). The Rent Board is required to make this information publicly available, except that information regarding the tenant's identity shall be redacted. Id. § 37.9E(e). Plaintiffs assert that the Notification Provision violates landlords' rights to free speech, equal protection, and privacy. See Cplt ¶ 16.

The Rescission Provision —The Ordinance contains a procedural protection for tenants in the form of a right of rescission for a period of 45 days following execution of the agreement. S.F. Admin. Code § 37.9E(g). Plaintiffs contend that because the Rescission Provision grants a tenant the power to unilaterally rescind a buyout agreement for 45 days after it is entered into, but grants an owner no similar power, it violates the landlords' rights to equal protection and/or due process. See Cplt ¶ 16.

The Database Provision —If a buyout agreement is ultimately signed (and not rescinded by the tenant), landlords must file a copy with the Rent Board within two weeks following the expiration of the 45-day rescission period. S.F. Admin Code § 37.9E(h). The Rent Board maintains a searchable database, publicly accessible at its office, of the information in the agreements, and includes a copy of the agreement with the identity of the tenant redacted. Id. § 37.9E(i). Plaintiffs contend that the Database Provision violates landlords' rights to equal protection and/or due process, and privacy. See Cplt ¶ 17.

Penalty and Fee Provisions —The Ordinance creates private rights of action where landlords fail to provide disclosures or file buyout agreements, and establishes penalties and awards of attorneys' fees in cases of successful enforcement. S.F. Admin. Code § 37.9E(k). Plaintiffs allege that these penalty and fee provisions violate landlords' rights to equal protection and/or due process because it makes the owner of the property bear the burden of any departure from the Ordinance's rules. See Cplt ¶ 16.

The Condominium Conversion Provision —The Ordinance provides that a property will be ineligible for consideration for condominium conversion for ten years after an owner or former owner enters into a buyout agreement with a senior, disabled, or catastrophically ill tenant, or with two or more tenants in the same building. S.F. Subd. Code § 1396(e)(4). Plaintiffs claim this provision interferes with landlords' right to settle disputes and violates their rights to due process and/or equal protection. See Cplt ¶¶ 15, 16.

CCSF filed an answer to the complaint on April 6, 2015, and now seeks judgment on the pleadings.

DISCUSSION

A. Legal Standard

"After the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). A motion for judgment on the pleadings "challenges the legal sufficiency of the opposing party's pleadings." William W Schwarzer et al., Federal Civil Procedure Before Trial (2015 ed.) § 9:316. Judgment on the pleadings is appropriate when the pleaded facts, accepted as true and viewed in the light most favorable to the non-moving party, entitle the moving party to a judgment as a matter of law. Hoeft v. Tucson Unified Sch. Dist. , 967 F.2d 1298, 1301 (9th Cir.1992); see also Fleming v. Pickard , 581 F.3d 922, 925 (9th Cir.2009).

The legal standards governing Rules 12(c) and 12(b)(6)are "functionally identical," Cafasso, U.S. ex rel. v. General Dynamics C4 Sys. , Inc., 637 F.3d 1047, 1054 n. 4 (9th Cir.2011), as both permit challenges directed at the legal sufficiency of the parties' allegations. Thus, the standard articulated in Twombly /Iqbal with regard to Rule 12(b)(6)motions applies equally to a motion for judgment...